Carolina Business Articles

EFCA: Rewriting American Labor Law

Unions? Employers/Employees Beware.

By Kati Knowland

Imagine for a moment a workplace environment in which a union is formed before the employer even knows there is a campaign and before employees have the chance to vote in a secret-ballot election. In the same scenario, many first-line supervisors are no longer helping the employer educate the workforce about unionization; instead, they’re now part of the bargaining unit. Imagine that the same employer must hire new staff, just to properly address an influx of requests from employees who want to change their hours or work from home.

That scenario could be a reality if several pieces of legislation pending in Congress become law. In the light of these bills, Kimberly J. Korando, an attorney with Smith Anderson in Raleigh, noted that now is a tremendously important time for employers to educate both themselves and their elected officials.

“I believe that we are going to see a lot of changes in workplace law and regulation,” said Korando. “It is a new day, there’s no question about that.”

Perhaps the most talked-about piece of pending legislation is the Employee Free Choice Act, also known as union card check legislation. The act would have three major impacts on employers, according to Korando.

First, it would effectively eliminate the secret-ballot election as a step in union organization. Under current law, when a union gets at least 30 percent of employees to sign a card requesting a union, the employer is notified and a secret-ballot election is ordered. Under the proposed EFCA, unions that got more than 50 percent of employees to sign cards would be automatically recognized, thus bypassing the secret-ballot election.

“The EFCA would do away with secret-ballot union elections and instead allow unions secretly to organize and achieve bargaining status through card checks, potentially without any knowledge of the employer,” said Charles Johnson, with Robinson, Bradshaw and Hinson in Charlotte. “That’s understandably disconcerting to employers.”

Second, the EFCA would require that, once the union has been recognized, employers be prepared to sit down to negotiate within 10 days. If an agreement isn’t reached within 90 days, the unions can bring in a mediator, said Korando. And if the mediator can’t get the parties to agree within 30 days, then a federal arbitrator would create a first contract, which would be binding for two years.

“Such an agreement imposed from the outside is likely to contain provisions undesirable for both sides,” said Johnson.

Third, the EFCA would substantially increase the penalties for federal labor violations on employers but not on the unions.

“That just inherently doesn’t seem to be the level playing field that the unions would like everyone to believe this law is,” added Korando.

Bill Sturges, with Shumaker Loop in Charlotte, noted that the EFCA would put both employers and employees at a disadvantage in union campaigns.

“There are a lot of small employers out there,” said Sturges, “so if there’s a company with 10 employees, one guy can get dissatisfied and get signatures from five others, then boom, there’s a union and representation and the company’s never really had an opportunity to discuss with employees the plusses and minuses of doing that.”

Joe Marotta, vice president, Americas, with Lord Corp., noted that despite the name of the proposed legislation, he feels it would actually take away freedom.

“The fundamental problem with the Employee Free Choice Act is that it would result in a loss of free choice for both employees and employers,” he said. “Employees would lose the protective right of secret ballot, and employers would be forced into binding arbitration. These outcomes are not consistent with “freedom” and the American way.”

The loss of privacy for workers, who wouldn’t be allowed a secret-ballot election, was a key concern for Sue Cole, principal with Granville Capital. Cole is adamant about the need to preserve the fundamental right to privacy that the EFCA would do away with.

“The thing that bothers me the most about it is that it is an invasion of individual privacy rights,” said Cole. “Secret-ballot elections protect those rights. Just imagine for a moment that instead of going into a voting booth to elect our elected officials, that we had to hand someone a card that anyone could see. Think about if you have to make a vote that’s that important in the workplace and everyone knows how you did it, how that could impact relationships and productivity.”

Some have said that, if passed, the EFCA would also reduce the nation’s global competitiveness. Marotta suggested that if the EFCA became law, his company would have to reconsider its options.

“A global and diversified company, LORD Corp. is proud to operate seven manufacturing plants in the US, and is a net exporter of over $100 million per year of products. However, enactment of the EFCA would cause us pause in considering expansion of our domestic operations to serve our growing global business,” said Marotta.

Although the law would apply to all states, the impact of the EFCA on North Carolina would be somewhat unique. North Carolina’s employers have little experience with unions and thus would see a greater impact of the new regulations.

“Many employers would be less prepared and more surprised,” said Sturges. “To a certain degree, you almost have to get into a union education program whether or not there’s a campaign going on because you don’t know. And North Carolina employers aren’t too in-tune to that activity, at least so far.”

Korando agreed, noting that if unions become more widespread in North Carolina, our state will lose some of its competitive advantage and, to new businesses looking to relocate, North Carolina begins to look more like Ohio or Michigan.

“We are so vulnerable because employers have never had to even think about the issues of unionization in most industries and sectors,” she said. “That, to me, is huge. These labor bills dealing with unions will change the way North Carolina employers do business with their employees. There is no doubt about that.”

And while some legislators seem to have begun to have concerns about the EFCA, and it seems perhaps unlikely to pass in its current form, Korando said that it is not the time for businesses to breathe a sigh of relief.

“In the face of the Senate majority leader saying that this is not going away and the unions saying that they’re going to escalate their advocacy campaign, it’s as important now for businesses to stay in the game, to make sure that they continue to educate their elected officials ... about the impact of any labor reform bill, whether it’s EFCA or some other compromise. We need to stay in the game, at the table, educating these elected officials about these various proposals.”

As important as the EFCA is, it is far from the only proposed legislation that would impact employers. The Re-empowerment of Skilled and Professional Employees and Construction Tradeworkers, or RESPECT, act is a companion bill to the EFCA, and it would reduce the number of first-line supervisors who would qualify for supervisory status. Korando said that while the bill may seem harmless, it could have serious implications for employers.

“For employers, first-line supervisors are the most important people in connection with educating their workforce about unionization and the effects of unionization,” she said. “So it may seem to be a fairly innocuous bill, but it is going to restack the deck when it comes to how union organizing is done.”

The Working Families Flexibility Act was reintroduced on March 3, 2009, in the House, and it would require employers to negotiate with employees who want to work fewer hours, work different hours or work from home or another location. Not only would employers be required to discuss these requests with employees, but employers would also be required to provide a decision in writing after an extensive review process, said Korando.

“Undoubtedly, this bill, if passed, will increase the cost of doing business for employers. In some workplaces today, particularly when employers have really tried to be as efficient and lower the cost of doing business as much as they can, who are they going to get to process these claims?”

Korando added that most employers are already taking these sorts of requests into consideration and, when possible, are granting them. She noted that she doesn’t see any benefit to this legislation.

“There’s no guarantee under this law that the employee gets what they ask for. It strikes me as very expensive and divisive. There’s no upside to this legislation.”

One piece of legislation on the horizon is the Healthy Families Act, which would require employers with 15 or more employees to provide seven paid sick days per year. Korando said that in her experience, most employers are already providing this sort of benefit to employees, but she is discouraged by the trend toward mandating and legislating the minutia in the workplace.

“This is a hugely important time,” said Korando. “It’s a cliche’, but we do find ourselves in a perfect storm, where it is a very ripe time for changes to be made.

Anybody who would say that change has not come to Washington, DC, is not an employer. CB